Financial Friction, Resource Misallocation And Total Factor Productivity Of China's Manufacturing Industry

Since Economic Reform and Open up,the economies of developing countries have shifted from a high-speed growth stage to a gradual development stage.In order to further enhance China's medium and long term economic growth,improving total factor productivity is the key.And resource misallocation is one of the important reasons that affects China's total factor productivity improvement at this stage.At the same time,manufacturing,as the main engine of economic growth,has the reputation of being the cornerstone of the real economy.However,related research shows that the lag in the marketization of the financial sector has caused capital distortions in China's manufacturing enterprises,which has led to cross-company misallocation in resources.Under this background,this article takes the financial friction as the research perspective,and comprehensively discusses the formation mechanism and economic consequences of China's manufacturing resource misallocation from the theoretical and empirical aspects.In theoretical research,this article demonstrates the theoretical mechanism of financial friction and resource mismatch affecting manufacturing productivity in two steps.The first step is to use the HK model to analyze how China's manufacturing resource mismatch affects manufacturing productivity.Based on the basic assumptions of capital distortions in subdividing manufacturing companies,the solution is to solve the maximum problems faced by final manufacturing product manufacturers and manufacturing The problem of maximizing the profit of intermediate product manufacturers,so as to derive the labor demand and capital demand of each segment of manufacturing under capital distortion,and the total factor productivity expression of each segment of manufacturing combined.On this basis,by comparing the expressions of total factor productivity in the presence of capital distortions and total factor productivity in the absence of distortions,it is concluded that the resource mismatch(i.e.capital distortions)among the manufacturing enterprises in each segment can trigger the overall Research conclusions on factor productivity loss.The second step is to use mathematical models to analyze how financial friction affects factor distortion,mainly through the problem of minimizing the cost of final manufacturing product manufacturers,maximizing the profit of manufacturing intermediate product manufacturers under factor distortion conditions and financial friction conditions.According to the solution,the capital and labor factor requirements of manufacturing intermediate product manufacturers under the condition of factor distortion and financial friction are obtained respectively.On this basis,by comparing these two expressions,it is concluded that the inadequate own funds and the higher the degree of financial friction,the higher the level of resource mismatch faced by manufacturing intermediate product manufacturers,which also leads to the huge loss of total factor productivity in manufacturing.In empirical research,this paper first uses the financial data and micro-measurement estimation methods of China's manufacturing A-share listed companies from 2007 to 2018 to measure the total factor productivity of China's manufacturing industry from 2007 to 2018;Then,this paper measures the degree of resource misallocation in China's manufacturing industry in 2007-2018 by three measurement methods: the interquartile range of TFP in the industry,the ratio of 90% to 10% quantile of TFP,and the standard deviation of TFP in the industry;Secondly,this paper analyzes the current situation of total factor productivity and resource mismatch in China's manufacturing industry from 2007 to 2018 from three perspectives in different industries and different provinces;Finally,this paper establishes a panel data model and an intermediary effect model to analyze and study how financial friction affects China's manufacturing resource misallocation at the company level,industry level and province level,and that resource misallocation affects China's manufacturing productivity Mediating effect.The empirical analysis results show that financial friction damages enterprises' total factor productivity,industry total factor productivity,and province total factor productivity by deepening the degree of enterprise resource misallocation,industry resource misallocation and province resource misallocation.Based on the above research,this paper puts forward corresponding policy recommendations: unnecessary government intervention should be reduced to create a fair competition and free market environment;avoid excessive interference in commercial bank credit decisions;gradually promote financial market reform;promote the international construction of financial markets.This paper has 4 figures,24 tables and 137 references.